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THE DREW DOUGHTY RETIREMENT PLAN

[There used to be this league called the NHL. In its last season, a player from the Los Angeles Kings named Drew Doughty held himself out of training camp in a contract dispute. At the time, I wrote an analysis of Doughty’s financial prospects, projecting several years into the future. His contract was settled and signed before I published the post.

This is it, in all of its many flaws –Q]

I’m pretty sure Don Meehan would like to get Drew Doughty something around $7MM AAV, and I’m equally sure Dean Lombardi would like to sign him for something closer to $6MM. Maybe Meehan wants $7.5MM. Maybe Lombardi will go up to $6.5MM. Hard to know without being in the room.

That million dollar difference is pretty concrete from Lombardi’s point of view. It directly affects the team’s cap position. But it’s less clear to me what it means to Doughty. I’m guessing to Drew the difference is that $7MM is exactly one inch longer than $6MM. And everybody’s measuring.

Not that a million dollars is anything to sneeze at. I fully support every athlete’s right to get as much money as soon as possible, since their earning power drops off considerably after 30 and disappears almost altogether after 40. I just don’t think Meehan and Doughty are staying up nights running numbers on Drew’s retirement plan.

But that doesn’t mean I can’t.

Let’s pretend Doughty signs the worst deal imaginable (for him). Let’s say it’s $5MM per year for 19 years. He’ll never sign for that low a figure, but we’re pretending. With a 19 year term, he would never get to test the free agent market, and the last ten years of the contract he would probably not be getting as much money as players who are still in diapers now. So that’s pretty much Doughty’s nightmare deal.

How bad is it? Well, I made a spreadsheet. It tracks Drew’s projected income and expenses between now and the year 2090, when he turns 100. I made every effort to assume the worst possible scenario in each case. And this is what the worst case scenario looks like:

The chart is below, but first, let me run down the assumptions built into it.

Drew signs this summer for $5MM per year for 19 years.

To this point, we’re pretending he has spent every penny he has earned. He has nothing in the bank.

We’re pretending he spends money like there’s no tomorrow. Accordingly, his annual personal expenses (not including one-time expenses like weddings, big real estate purchases, etc.) come to $500,000. This allows Drew to have a fancy house at the beach, a new Porsche every year, a personal shopper at Barney’s, a coterie of assistants, what have you.

His personal expenses are fixed and are the same every year for the rest of his life. They are, however, indexed for inflation, set at 3%.

Drew gets some bad advice and signs an endorsement deal with Dunkin’ Donuts, paying him $50,000 per year until he retires from hockey. I’m assuming this is about the worst he could do endorsement-wise.

At age 27, Drew gets engaged. Ring: $250,000.

At age 28, Drew gets married. Of course, he pays for the wedding himself. I set the cost of the wedding as equal to one year’s worth of his annual expenses. $950,000.

From this point forward, his expenses go up 50%, to account for Mrs. Doughty.

Age 40: Drew’s pension kicks in, to the tune of $100,000 after taxes per year for the rest of his life.

Doughty and Wayne Simmonds invest heavily in the first professional Air Hockey league, which is not the old arcade game, but actual hockey played in the sky with jet-packs. It’s enormously successful but a lawsuit from Warner Bros (claiming infringement on Quiddich) leads to a settlement in which Warners takes control of the league and Doughty and Simmonds are each bought out to the tune of a pathetic $150,000 per year (about $50,000 in today’s dollars) for ten years. (you’re free to imagine a different second career for Doughty; the point is, worst case, he ought to be able to make at least that much.)

Age 43: Mrs Doughty sues for divorce. She gets half. $24,600,000.

Age 56: Drew finds that all three of his daughters are getting married in the same year. I set the cost of the weddings as with Drew’s wedding, equal to one year’s expenses, per wedding. $3.52MM total.

Age 75: inspired by Chris Chelios, Drew spends $15,000,000 to have his consciousness uploaded into a robot. He comes out of retirement and rejoins the Kings. Unfortunately, this means he will no longer receive his pension. And as a robot, he is not allowed a salary (robot rights still being several decades off).

Age 100: Drewbot plays another 25 years for the Kings, at which point his robot body expires per the 28th Amendment to the U.S. Constitution, which caps robot leases at 25 years, to prevent an uprising of immortal robots.

Drew’s consciousness is uploaded into the Hockey Hall of Fame, where he is on permanent exhibit, playing in the HoF virtual league with his fellow Hall of Famers. His estate, valued at $13MM, is distributed to his three daughters, now 69.